The principal influence of Negroes upon property values in a neighborhood is psychological, due to the deep-seated and general prejudice of whites against Negroes, which begets and sustains the belief that Negroes destroy property values wherever they go. The facts as ascertained by the Commission show that Negro occupancy in a neighborhood is more often due to a prior depreciation of the property there than the depreciation is due to Negro occupancy; and that it is unfair to place the entire responsibility for loss of property values in a neighborhood upon Negro occupancy. In other sections of the city, where there are no Negroes, depreciation of property values has been produced by contacts between populations differing in race, religion, or social standards. Race prejudice produces the present conditions of social injustice toward the Negro, and uses the depreciation of property which it causes, as a new ground for such racial prejudice.
In virtually every neighborhood in Chicago where Negroes now live they were preceded by two or more distinct groups of occupants, and an earlier and often long-continued depreciation of property values is one of the explanations of their presence. This depreciation of values has come from several causes, such as natural physical deterioration, vacation of old and large houses through the death of their original occupants or their removal to new neighborhoods, or the encroachments of vice, or business, or factories, and the like. In this way Negroes have found an opportunity to rent or buy at figures that were comparatively low and within their limited means.
The extension of Negro occupancy into the district between State Street and Lake Michigan and Thirty-first and Thirty-ninth streets followed such an earlier depreciation; and later, similar conditions had similar consequences in the district between State Street and Cottage Grove Avenue and Thirty-ninth and Sixty-third streets, where there has been the most active opposition to the Negro influx.
In the first named of these two districts there are now about 20 per cent more Negroes than whites. During the eighties and nineties this area embraced the most fashionable residence district in Chicago, and almost the entire Negro population lived in the adjoining area on the west—from State Street to Wentworth Avenue and north of Thirty-fifth Street. When the fashionable people of this district began to move to the North Side, the deserted section began to depreciate, and costly houses recently occupied by wealthy owners were thrown upon the market and began to pass through the hands of real estate dealers and into the possession of people belonging to a different social class. Physical deterioration also played its part. Between 1900 and 1910, when the first Negroes moved into Wabash Avenue—one street nearer to the old fashionable district—the houses were at least twenty years old and many of them much older. Real estate men estimate the natural depreciation of such buildings at from 2 to 2½ per cent per year; so that in many cases property once exclusive and of a high class had depreciated at least 50 per cent before there was any prospect of Negro occupancy.
In 1912 the old vice area west of State Street and northwest of this exclusive area was broken up. The inmates, numbering at that time more than 2,000, moved into the nearest large houses available where they could ply their trade clandestinely. They could afford high rents, and owners and agents profited accordingly. Cabarets, cafés, and saloons sought the side streets, and buffet flats were opened. Raids and prosecutions called attention to the changed character of the neighborhood, and property values sank still lower. Many buildings affected by this decline were bought up by real estate speculators and sold to Negroes who were eager for housing. One speculator bought more than 1,400 such houses.
Then came the automobile industries with their showrooms, gas stations, manufacturing plants, and accessory shops, even invading the boulevards, and the desirability of adjacent residence property still further declined.
After the coming of the Negroes the depreciation continued. It was clear that the character of the neighborhood had definitely changed. Negroes were frequently unable to make the needed extensive repairs while they were paying for their property. There are other instances in this area where property not owned by Negroes declined in value chiefly because of its neglect by landlords.
In the district west of Cottage Grove Avenue, adjacent to Hyde Park proper, depreciation had proceeded in much the same manner. This neighborhood was temporarily congested in the period of the World's Columbian Exposition in 1893, and hotels and apartment houses were built far in excess of normal needs. Real estate men of that district have made much of this point, stating that many of the houses there had been vacant as long as fifteen years. The first "undesirables" were not Negroes, but other national or racial groups of whites who were objectionable to the original residents. Several factors have combined to make this section less and less desirable for residence purposes. It is close to the Stock Yards, with their offensive odors; and railroads flank it on both sides, with their smoke and noise. The coming of the automobile industries, the opening of boarding-houses, the southward movement of the vice element, all had their adverse effect on property values before Negroes moved east of State Street.
The widespread and deep-seated racial prejudice among whites against Negroes, heretofore mentioned as a psychological basis for the belief that the presence of Negroes is disastrous to property values, is directly reflected in the unwillingness of whites to buy property close to that occupied by Negroes and in their desire to sell, even at a sacrifice, when Negroes move into the immediate neighborhood. While frequently the demand for property among Negroes financially able to buy has not been large enough to absorb realty offered for sale because of the reasons given here, there are, on the other hand, some neighborhoods where the Negro demand has provided a market for property that had long been unmarketable, and in these neighborhoods there has been some increase in the value of such property. It should be noted that the understandable bitterness of feeling on this question of Negro entrance into white residence districts has been intensified in some cases through exploitation, by both white and Negro real estate operators, of anti-Negro prejudice and fear of loss on account of Negro occupancy.
In brief, Negro occupancy depreciates the value of residence property in Chicago because of the social prejudice of white people against Negroes, and because white people will not, and Negroes are financially unable to buy at fair market prices property thrown upon the market when a neighborhood begins to change from white to Negro occupancy; nevertheless, a large part of the depreciation of residence property often charged to Negro occupancy comes from entirely different causes.